The Geopolitics of the Central Bank System

The genesis of the oligarchic banking order: from the central bank system to international financial institutions

‟Let me issue and control a nation’s money and I care not who writes the laws.”

Mayer Amschel Bauer, founder of the Rothschild dynasty

The concept of the central bank is predicated on the centralization of monetary matters in the hands of central bankers controlled by private bankers. Monetary policy is thus by nature geared to satisfying the best interests of the majority shareholders of the main private banks.

Centralized banks that are owned by private financial actors, regulate so-called State currencies, and more or less directly control the private banking sector are the nuclear core of the monetary question. Central banks2 are thus the nerve centre of the current financial system.

The central bank concept was quick to wrap itself in the virtuous flag of financial orthodoxy to secure acceptance in the eyes of the public. It is received wisdom that an independent central bank is needed to prevent politicians from making excessive use of the printing press. Two factual observations put paid to such a belief.

The first observation is that the very concept of a central bank conveys an illusion of independence created and nurtured by banking actors. Central banks have always been independent of elected officials, but they have never been independent of the bankers who control them.

In other words, the current central bank system is, by design, independent of any popular control of a political nature, but from the outset has been under complete capitalist control. But, logically and conceptually, a State can achieve financial orthodoxy in many ways that do not involve entrusting the keys to the safe to a homogenous group of people.

For example, budgetary orthodoxy would be better served by countervailing powers with true statutory independence. The guardians of the public coffers, who are responsible for the money supply, should also be regularly accountable for the effects of their policies on the mass of individuals who constitute the State. Such a regulatory body could consist of representatives of civil society, excepting bankers. It would have legal and political powers to sanction the keepers of the keys if the effects of their monetary policies ran counter to the economic interests of the individuals subject to them and to the free flow of commerce – commerce that benefits all actors, rather than only the owners of the largest cartels.

The second observation is that the great majority of politicians – the people’s elected representatives –, whether they exercise executive power or legislative power, are ignorant of monetary matters. In days gone by, they were no better versed in such matters than they are today. Monetary decisions, including those involving recourse to the printing press, were whispered to them by men skilled in the art of banking. Moreover, from a strictly conceptual viewpoint, the difference between yesterday’s printing press and today’s quantitative easing is subtle. It is tempting to believe that quantitative easing is merely a sophisticated and improved version of the printing press of old, for, in short, both techniques channel the money supply in one direction or another.

The movements of the money supply are orchestrated today in a co-ordinated fashion that is in no way aligned with the best interests of the public; they are always based on the greater financial good of a small number of big bankers – people who are not stateless, for they are not without a homeland, but who are transnational in the sense that all States, by means of the banks, constitute their homeland.

In reality, the argument that central bank independence is justified by the need to control politicians who may be too inclined to run the printing press is merely a pretext for a takeover of political power by the dominant economic actors – the owners of the largest banks. With the advent of central banks, the State as a political entity surrendered control over its currency, one of its sovereign prerogatives, to the special interests of the dominant business group. This loss undermines the integrity of the polity. It is instructive to recall the self-fulfilling prophecy of Mayer Amschel Bauer, founder of the Rothschild dynasty, who stated in the 18th century, “Let me issue and control a nation’s money and I care not who writes the laws.”

How do we trace the genesis of today’s oligarchic banking order? We simply describe the various stages of the advent of the central bank system.

I) The creation of individual central banks

We begin with the powerful Bank of Amsterdam, created in 1609. It was the first financial institution of modern times because it introduced the concept of bank currency as means of payment. Strictly speaking, the Bank of Amsterdam did not issue banknotes, but its receipts were used as a proxy currency for commerce. The Bank of Amsterdam’s control over paper currency made it the precursor of the central bank.

Even so, the true origin of the central bank system goes back, in an archaic, unicellular form, to the creation of the Bank of England on July 27, 1694, followed a century later by the Bank of France, founded by Napoleon on January 18, 1800.

After these experiments, the great European financiers – the main holders of capital – began, late in the 19th century and early in the 20th, to develop the central bank system on a far larger scale with the creation of the U.S. Federal Reserve System.

II) The creation of a central bank system: the Fed

Once the concept of a central bank in the hands of private bankers had taken root in Europe, the long quest to seize monetary and financial power led to the creation of the Federal Reserve System in the United States in 1913.3 The Fed consists of a dozen regional central banks overseen by the most important of them, the Federal Reserve Bank of New York.

The Fed is a private banking organization with a hierarchical, pyramidal structure. It has full freedom to control and manage monetary and financial flows within the State political system, but with complete independence from it. The initiators of the Fed, after its nominal creation in 1910, had to engage in three years of intense lobbying to impose this financial titan on U.S. political power, which on that occasion revealed its inherent weakness.

Purportedly national, the Federal Reserve is so in name only. In point of fact, it was created by a handful of European private bankers, supported by some highly ambitious new American capitalists.5 As for its federal nature, that does indeed exist but it is independent from the political federalism on which it is superimposed. The political creation of the Fed in 1913 ushered in a new era in the country: the federal State lost its political justification and from that point on officially dedicated itself to defending the interests of the dominant economic group.

After the creation of the Federal Reserve, later in the 20th century we saw the advent of the Bank for International Settlements, a development that represented a giant step toward an oligarchic world banking order.

III) The creation of the BIS

The jewel in the crown of the international banking system, the Bank for International Settlements (BIS), headquartered in Basel, Switzerland, was created in 1930 under the Young Plan. This special institution benefits from all possible immunities and enjoys diplomatic privileges, which makes it a State within a State. Today, the BIS acts as a central bank for central banks, and serves as an umbrella for various central bankers – in Western and affiliated countries – by holding regular meetings and organizing and overseeing the monetary policies they implement.

The cornerstone of banking domination

The BIS, which is largely unknown to the public, played a key role in the Nazis’ economic miracle between the two World Wars, for it enabled much of the financing for Germany’s reconstruction, as well as its remilitarization under Nazi rule. History records that the Anglo-Saxon bankers were invited to the festivities by the great German financial expert Hjalmar Schacht6 on the occasion of the Dawes Plan, quickly replaced by the Young Plan, which instituted the BIS.

Specifically, the loans granted by the BIS enabled Hitler (who paid the interest on them until the end of 1944) to prepare for war by placing the burden of the financing effort – which, by the way, enriched his creditors – on the people of Germany and later on the people of the conquered countries.

The initial objective of the BIS, as described perfectly by the historian Annie Lacroix-Riz, was to cause the reparation payments that Germany owed France to disappear by a feat of legerdemain. The French plutocracy, after its manoeuvrings during the negotiation of the Treaty of Versailles, acquiesced in the Anglo-Saxon view early in the 1920s and agreed to waive its war reparations in favour of the interest payments it would receive, along with other, mainly Anglo-Saxon, oligarchic financial actors, on loans that the BIS would grant to Germany. The citizens of Germany were the first big losers – politically and economically – as a result of these cozy arrangements between the oligarchs who controlled the various countries.

Today, far from having disappeared –although its disappearance was sought for a time –, the BIS plays the role of a central bank for central banks. It performs informal but real co-ordination of the monetary policies of the Western and affiliated countries currently under oligarchic domination. This co-ordination lends considerable weight to the Western banking system, giving it geopolitical influence over all the States of the world, including, and especially, those not affiliated with the Western oligarchic order.

The BIS is the cornerstone of the current structure for Anglo-Saxon monetary domination: in other words, it serves to enrich oligarchies through their financial interests, albeit no longer directly, through control over goods and raw materials, as was previously the case in continental Europe.

The BIS, a State within a State, strives to undermine the concept of the State

The BIS benefits from all possible immunities and enjoys diplomatic privileges.

From the legal standpoint, to give such privileges and immunities to a financial institution is to elevate it structurally to the same level as a State.

The essential function of a State is to be a political body whose role is to regulate life and society in a given territory. But a banking body whose purely economic role is to serve the special interests of its main owners does not answer to any public interest in the political and organizational sense of the term; it answers only to the interest of its main owners, a collectively homogenous group. Placing the State and a financial body on an equal footing by giving such a body international status undermines the structural role of the State, whose political role is purely and simply negated.

The creation of the BIS marked the first time in world history that an international financial institution acquired political status akin to that of a State. The outcome of this successful experiment was the European Monetary System (EMS), established in 1979 in a step toward European monetary integration, which began in earnest with the creation of the European System of Central Banks (ESCB) in 1998.

IV) European centralization of central banks: the ESCB

In the United States, the Fed experiment was so successful that, adopting a policy of sticking with the tried and true, the big Western financiers decided to duplicate the model and impose it on Europe.

Thus the central bank system has more recently had a game-changing impact on the international legal order through the European Union, which entailed the creation of the European System of Central Banks, overseen by the European Central Bank (ECB), and completed by the European Stability Mechanism (ESM) in 2012.

The political creation of a unified Europe – the mixing of chalk and cheese, thanks to the dominant role of the United States7– has seen the advent, alongside political institutions dedicated to the private interests of multinationals,8 of a system of central banks that is modelled on the U.S. Federal Reserve and is therefore independent of political power.

To deceive the people, the pseudo-democratic European Parliament9 was maintained. But this body – in reality a pure formality – was likely to impede the interests of the dominant economic group. That is why the group opted for the guarantee of direct legal control by modelling the central bank system on the U.S. Federal Reserve.

The ESCB is designed to be structurally independent of the States’ political governments10 but to obey capitalist banking control. Unofficially, the ESCB is dominated by the Deutsche Bundesbank, Germany’s central bank, which to a large extent represents the same interests as the Fed. Within the ESCB system, the Bundesbank serves as the intermediary for oligarchic imperatives in financial matters, just as the German government serves, within the European Union, as the go-between for oligarchic directives when the legislative process needs to be used.

Germany’s fundamental role in the oligarchic process is due to the weight of history and the Germano-Anglo-Saxon capitalist links forged early in the 20th century. Since the Second World War, Germany’s fundamental role has also been due as much to the co-opting of the Nazi military elite by the U.S. financial and political system (CIA, NASA, etc.)11 as to the military domination of the German territory by U.S. armies.

To understand how the banks managed to dominate Europe through money, we need only recall that the BIS articles served as the model for the European Stability Mechanism. The ESM, as the new financial institution, is the direct heir of the BIS in its role of negating the political and organizational role of the State.

The oligarchy’s supremacy in monetary matters was consolidated at the world level by the Bretton Woods Agreement, which granted the American-and-English oligarchy definitive supremacy over the classical Western oligarchies.

V) Financial institutions created under the Bretton Woods Agreement

With the Bretton Woods Agreement, the Western plutocracy, through the United States, the financial winner of both World Wars, imposed on the world two major international financial institutions that are supposedly regulatory: the International Monetary Fund (IMF) and the World Bank. In so doing, Bretton Woods created the Anglo-Saxon monetary and financial order whose yoke we live under today.

The IMF

The IMF, that great enemy of the people, operates in a manner somewhat similar to the BIS. It grants interest-bearing loans to States in financial distress – distress that can often be traced to speculative financial players, such as hedge funds.

But it differs from the BIS in that it provides loans in exchange for dual compensation: first, interest payments and, second, the sale of State or public assets to multinationals to ensure deleveraging. Behind its much-vaunted good intentions, the IMF’s structure reveals that its true objectives are just the opposite of what it proclaims: its purpose is simply to stage a charade that involves imposing debt and then demanding its repayment – a charade that impoverishes States and populations alike.

This design flaw is deliberate; it is merely the legal and international manifestation of a system that enables economic actors to prey on the political system by weakening the financial and economic foundations of the State. Once again, the political nature of the State has been perverted by an international institution that reduces it to the rank of a private organization, disregarding the collective interests that underpin the very concept of the State.

The World Bank

As its name indicates, the World Bank is the cornerstone of the future edifice of world government. The World Bank is at the heart of a system that protects the investments of multinationals, a matter that will be covered in a discussion of free trade in a subsequent article. It officially claims to be working to eradicate world poverty but, unofficially and structurally, its investment-friendly posture actually makes poverty worse.

Early in 2015, a consortium of investigative journalists revealed that that the World Bank was financing projects that were not only inefficient but also in complete contradiction with its avowed mission, and that it was forcing millions of people to abandon their land and their homes.

The heads of the World Bank, dominated by Anglo-Saxon finance, have included Paul Wolfowitz, a Bush family friend, a proponent of the Trotskyism and neoconservatism of the Chicago School, and a former highly placed Pentagon¬ official. In 2007, Wolfowitz had to resign as president of the World Bank amid a nepotism scandal. In 2014, another scandal erupted just as the World Bank proclaimed that it was regaining its financial stability by tightening its belt and boosting its resources by raising the cost of its loans and increasing its market investments. Apart from the fact that raising the costs of its loans belied its official objective of eradicating poverty, its cost cutting reeked of hypocrisy, given the premiums and bonuses awarded that year to several of its senior officials.

The international financial organizations created under the Bretton Woods Agreement are actually smokescreens that give legitimacy to the efforts to undermine the financial resources of States.

With the creation of these institutions, we are seeing the economic supersede the political on a global scale. The political conception of the world, though in essence varied because of the specific history of each nation, had as its mission to regulate all interests in a given territory; but the strictly economic and financial conception of the world serves only the interests of the small group of individuals who dominate economic life. Thus the concept of territory loses its relevance.

Moreover, along with the financial domination of States comes a worrisome convergence of the interests of the various world leaders, paving the way for an oligarchic world government, the infamous New World Order.

Conclusion

Control over the world’s financial flows by an economically dominant group necessitates currency control. This control is effected through a sophisticated system of central banks. Control over currencies is the preferred instrument that the major holders of Western capital use to effect political change in the economies of all the world’s countries.

International finance, dominated by the owners of the big private banks, operates through central banks as a closed system catering to the interests of a small number of individuals who have appropriated the monetary function and, in so doing, the economic and political functions of nation-states, which are doomed to disappear. This world domination by finance has been completed by international financial institutions, such as the BIS and those created under the Bretton Woods Agreement.

The current political domination by financial actors will irremediably lead to the disappearance of nation-states. The classical type of Western European domination – that of the Ancien Régime – was based on landed property, with the Continent’s political and legal conception of the world revolving around the nation-state. Since the French Revolution and with increasing speed in the 20th century, this conception has yielded to financial domination based on an Anglo-Saxon conception of the world that is geared strictly to the economic.

Today we are witnessing the final scenes of a vast undertaking to depreciate the political conception of the State in favour of the private interests of a small group of people who have made themselves the masters of the world monetary system. In the West, the political has yielded to the economic.

It is not by chance that the Anglo-Saxon method of domination based on money and finance has finally supplanted the Continent’s traditional method of domination based on property. The shift has occurred mainly because open and direct appropriation of wealth is inefficient; it raises much more hostility and resistance than devious appropriation carried out anonymously by cartels. The anonymity that goes hand in hand with the capitalist business model plays a vital role in the current world domination by the financial elite.

Valérie Bugault is a Doctor of Law, a former tax attorney, and an analyst of legal and economic geopolitics.